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||Neutral Citation Number:  EWCA Civ 424
||Case No: A3/2009/1646 & 1652
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION INTELLECTUAL PROPERTY
The Hon Mr Justice Arnold
 EWHC 1623 (Pat)
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
THE RT HON LORD JUSTICE JACOB
THE RT HON LORD JUSTICE JACKSON
SIR JOHN CHADWICK
|| Vestergaard Frandsen S/A (now called MVF3 APS)
Vestergaard Frandsen SA
Disease Control Textiles SA
||- and -
||Bestnet Europe Ltd
3T Europe Ltd
Intelligent Insect Control Ltd
Torben Holm Larsen
Trine Angeline Sig
Mr Mark Platts-Mills QC, Mr Tom Moody-Stuart and Mr James Whyte
(instructed by Field Fisher Waterhouse) for the Claimants
Mr Martin Howe QC and Mr George Hamer
(instructed by McGuireWoods London LLP) for the Defendants
Hearing dates: 16/17/18 March 2011
HTML VERSION OF JUDGMENT
Crown Copyright ©
Lord Justice Jacob:
- We have before us no fewer than three appeals (permission for which was in part granted by the trial Judge, Arnold J and in part by me), a cross-appeal and an application for permission to appeal. The Judgments concerned are as follows:
i) The "Main Judgment," 3rd April 2009,  EWHC 657 (Ch);
ii) The "Remedies Judgment," 26th June 2009,  EWHC 1456 (Ch);
iii) The "Whopes I" Judgment," 7th July 2009,  EWHC 1623 (Pat); and
iv) The "Remittal Judgment", 7th March 2011,  EWHC 477 (Ch).
The Main, Remedies and Remittal Judgments exist in both full and redacted forms. The full forms contain confidential trade secrets of both parties. The above references are to the redacted forms. I shall endeavour to write this judgment so as to omit any matter said to constitute trade secrets.
General Background and the nature of the appeals and cross-appeals
- The claimants (collectively "VF" – there is no need to distinguish between them) are in the business of inter alia, insecticidal fabrics and particularly LLINs (long lasting insecticidal fabrics). For the purposes of this appeal it is accepted that they own the rights to the technical trade secrets the subject of these proceedings (see Main Judgment at .
- VF claimed that the defendants' product, a long lasting anti-mosquito bed net called NetProtect, was developed using its confidential information in a database called Fence. The Judge so held and granted an injunction in respect of the first version of NetProtect. The defendants appeal that decision. The Judge also decided that later versions of NetProtect (called WHOPES I and WHOPES II) should not be subjected to an injunction: they owed a lot to independent work done after connection with VF had been severed and an injunction would be disproportionate. From that decision VF cross-appeals.
- The individual defendants (Mr Larsen and Mrs Sig) were employed by VF. When they left (in the summer of 2004), Mr Larsen was Head of Production and Mrs Sig Regional Sales Manager for Europe and South America.
- Prior to leaving VF, these two defendants surreptitiously and with some dishonesty (e.g. Mr Larsen gave a false name when dealing with an Indian supplier to VF) embarked on a project to compete with VF in LLINs. They did so in association with a scientist, Dr Skovmand, who was experienced in this field. Although not actually employed by VF, Dr Skovmand had acted as its consultant for a long time and was in effect its head of development. He often acted for VF in relation to third parties and devoted a substantial proportion of his time to working for VF (for detail see the Main Judgment at [308-335]). He too took part in the surreptitious project, a matter which he tried to conceal for some time, but did not break his connection with VF until December 2004.
- The Judge found, and it is now no longer challenged, that Dr Skovmand owed a duty of confidentiality to VF. The Judge found Dr Skovmand not to be a truthful witness, "in particular with regard to the development of NetProtect." Inaccuracies in various statements made by him were not "merely mistakes and errors of recollection." Dr Skovmand is not a defendant in these proceedings but he and his company are defendants to corresponding proceedings in France, where he is based.
- The vehicles used by the personal defendants for their activities were initially Danish companies. When sued there, the business was moved here and the four company defendants were created. The details of all this are in Arnold J's judgment. None of it matters now. So I simply call all the defendants collectively "the defendants."
- The Judge also found that Mr Larsen was not a truthful witness "in particular with regard to the development of NetProtect." He was not so critical of Mrs Sig, holding (as she had said) that she played an important role on the commercial side. He did say "I believe she knew more about the technical side than she was prepared to admit". But there is no finding that she knew any of the information in or had access to the Fence database or that she personally knew that it had been used by Dr Skovmand in developing NetProtect. These are important points when I come to consider her appeal.
- Finally I must refer to two other matters. Firstly, although he specifically asked for it, the defendants failed to provide the Judge with a clear account of how NetProtect was developed:
I invited both counsel during their closing submissions to provide me with their side's respective proposed findings of fact. I made it clear to counsel for the Defendants that I considered the most important factual question in the case was how the Defendants had developed their product, and that so far as that was concerned what I was expecting was a historical recitation. In the event, counsel for the Defendants did not provide me with such a history in his closing submissions. I infer that the reason why he did not do so was because the state of his clients' evidence did not enable him to.
- Secondly, not only did the Judge find that full disclosure of all documents relating to the development of NetProtect had not been given but, even more seriously, that certain documents, called the Extract DB documents which had been specifically annexed to the Defence, were forged for the purposes of misleading the Court. The Judge dealt with this very serious issue in Appendix 1 to his Main Judgment. He held that Mr Larsen was primarily responsible for this but that Dr Skovmand "must have known that they were not genuine or at least did not show what they purported to show" .
- Having heard all the evidence and reviewed the documents in meticulous detail, the Judge held:
 Dr Skovmand did misuse the information in the Fence database, in particular the information relating to samples 7-16 and more particularly the information relating to samples 8, 9 and 13, by using it to devise the initial NetProtect recipes which were tested in October 2004.
 I think that it is fallacious to divorce the recipes from the results. Furthermore, I consider that Dr Skovmand did use the results, in that he used them to identify which recipes were worth repeating and to decide what variations should be tested.
The Main Appeal: the finding that the Fence Database was used
- The basic rule is that in CPR 52.11(3) "The appeal court will allow an appeal where the decision of the lower court was (a) wrong or (b) [irrelevant here]". Mr Martin Howe QC for the defendants realistically accepted that there was no prospect of successfully showing that the Judge was wrong in any of his detailed adverse findings of fact, which I have but summarised above.
- The heart of the appeal is essentially this: that it makes no technical sense to say that any information in the Fence database could usefully have been used to develop NetProtect. And, untruthful witness though he was found to be, Dr Skovmand was entitled to use his general scientific skills to develop NetProtect and that is all he did.
- To understand this more fully it is necessary to say something of the technology involved. LLINs are made by adding insecticide to plastic netting. Application to the surface of already made netting or the filament used to make it is not satisfactory without special measures: the coating will not last due to weather and cannot withstand repeated washing. So the insecticide is incorporated into the plastic before it is extruded into the filaments which are used to form the netting. The idea is that the insecticide will gradually leach out thus maintaining an insecticidal surface notwithstanding repeated washing, degradation due to exposure to light and the effects of time generally.
- Merely incorporating the insecticide into the plastic is not sufficient to make the idea work. You need additives of various sorts. The endurance of the insecticidal properties of the net thus depends on a host of factors. Speaking very generally they include the nature of the plastic, the amount of the insecticide, the nature, amounts and proportions of the various additives, the thickness of the filament, and the processing conditions (particularly the temperature) of the extrusion process. Getting it all right involves much trial and error. The trials of course include not only making a LLIN but testing it in a variety of ways as fully set out in Arnold J's judgment.
- The Fence database is a substantial database created by Dr Skovmand for VF over a number of years. It sets out the ingredients and proportions of ingredients used to make LLINs and the results of tests on those LLINs. The ingredients and their proportions were called "recipes" although that word was not used as in cookery where a recipe includes not only the list of ingredients but also instructions on how to arrive at the final product (e.g. in what order to mix, cooking temperatures and so on).
- The Judge describes the Fence database (and the NetProtect database) generally at [28-33]. He went into the detail of the Fence database at [336-349]. There was no challenge to his accuracy. I do not propose to set it all out again. There were 665 samples for which data is recorded of which nearly all used deltamethrin as the insecticide and most used additives A B and C (I do not identify them).
- The Judge found as follows:
[352, 353 and 354] The data contained in the Fence database demonstrates that [Additive A] acts as a "high migration" additive which increases the migration of deltamethrin from the bulk to the surface of the fibres, producing an increase in the number of washes before the mortality rate drops below 80%. It also demonstrates that [Additive C] acts as a "low migration" additive which reduces the migration of deltamethrin from bulk to surface.
39 samples were subjected to wash tests. Of these, 24 used deltamethrin in 14 unique formulations. All these samples are based on a deltamethrin content of [Figure 1] or [Figure 2] g/kg. All of the samples which were washed more than 21 times are based on deltamethrin. As noted above, three samples reached or got close to 20 washes before mortality dropped below the 80% mortality threshold, namely samples 8, 9 and 11. The best performing sample was sample 11.
The best performing sample in four and eight month outdoor exposure tests and in one month Kenyan exposure tests was sample 9. The best performing samples in UV-B exposure tests were samples 7 and 8.
- Mr Howe provided us with some tables consisting of extracts from the Fence database and the database created by Dr Skovmand for NetProtect. None of the NetProtect recipes are exactly the same as a particular Fence recipe. On the other hand they are close to samples 8, 9 and 13 as the Judge found. And the precise amount (to three significant figures) of nominal deltamethrin is the same in both even though that precise value has no technical basis. The best that Dr Skovmand could say about its use for NetProtect is that "he remembered it." That is hardly an explanation for using it.
- That is not the only odd number that called for explanation. The use by an alleged copyist of odd or unusual detail found in the original is often a tell-tale of copying, as for example in LB Plastics v Swish  RPC 551 – the reverse countersink. The Judge, with considerable care and detail, considered the question of the other "odd numbers" at [555-559]. His careful analysis ended thus:
 I conclude that the NetProtect October 2004 trials were not a well-designed set of experiments which were planned to avoid problems with co-linearity in the way that samples 7-15 in the Fence database were, and that the explanation for the choice of [Figure 15] was not Dr Skovmand's "mathematical protocol".
- Mr Howe pointed out that the some of the proportions of the ingredients used in samples 7-20 of the Fence database, which at first blush are unusual, had a rational basis. The Judge so found at :
During the course of cross-examination Dr Skovmand came up with an explanation for his use of the same number in the NetProtect recipes (as to which, see below), which I consider is the explanation for its use in samples 7-20 in the Fence database. I shall explain this in more detail below, but in short Dr Skovmand chose [Figure 3] with the intention of avoiding problems of co-linearity in linear regression analysis of the experiments.
Mr Howe suggested that the coincidence was therefore merely of the same man doing the same thing all over again. But the Judge specifically rejected that, and I can find nothing to show he was wrong.
- Mr Howe suggested that this was a case like Billhöfer v Dixon  FSR 105 where some engineering information had been taken from copyright drawings but nonetheless there was no infringement of copyright in the drawings. However that case turned on the fact that it was a copyright case where the question was whether what was visually significant had been taken. This case is about taking what is technically significant: the Judge found that that which was technically significant in the Fence database was used to devise the initial NetProtect product.
- Overall I conclude that there was ample material here to justify the Judge's finding in the Main Judgment that the Fence database was in fact used as the basis for the first NetProtect recipes. It was not just a matter of Dr Skovmand using his general skill and knowledge or matter in the public domain (such as the use of information as referred to in  of the Main Judgment. It was a case of his using the detailed results in the Fence database so as to choose recipes for NetProtect which, based on those results, were likely to be successful, as indeed they were and were predicted to be from the outset. Indeed I cannot imagine any good reason why the defendants should have lied and forged to cover their tracks if the Fence database had not been used.
- I am not shifted from this opinion by the passages from the cross-examination of Mr Gary Howe (VF's expert) upon which Mr Howe relied. They show that Mr Gary Howe accepted that scientifically the defendants could have reached their initial formulation of NetProtect by their own research. But that does not mean that they actually did that rather than taking the short-cut of using the information in the Fence database. Quite how much time and trouble they saved is a matter for debate (perhaps in the inquiry as to damages). It may not amount to a vast amount. But save time and trouble they did.
The Remittal Judgment appeal
- I turn to the Remittal Judgment. Since this was closely connected to the main appeal (which has permission) and we heard full argument on the point, I would grant permission to appeal.
- The Remittal Judgment came about under the following circumstances. A point rather lightly (and rather late in the day) touched upon at the main trial was the significance of the nature of the plastic used. Polyethylene (PE) comes in a variety of forms ranging from low density (LDPE) to high density (HDPE). The polymeric chains are more highly packed in the case of HDPE than in the case of LDPE.
- Whilst the appeal was pending, a VF patent application WO 2010/015256 was published. The defendants applied to this court to adduce further evidence consisting of this application. They also sought further disclosure of the underlying material behind the patent and permission to adduce further expert evidence.
- The point of the exercise was said to be that the application showed - and VF should have disclosed before trial - that the relative proportions of HDPE and LDPE used in the manufacture of a net were really important – so important as to make the proportions of the additives of no or little significance. Thus, because the Fence and NetProtect recipes used different proportions of HDPE and LDPE, it would not have been sensible or useful to use the data for the former as a guide for the recipes to be used in the latter.
- This Court decided there might be something in this point. It accordingly ordered appropriate disclosure and other procedural matters and ordered, pursuant to the convenient power conferred by CPR r.52(2)(b) that:
 There be remitted for determination by the Chancery Division before Arnold J the following questions of fact, namely:
(i) how strongly the migration rate of deltamethrin is affected by the addition of LDPE to the polymer mix;
(ii) how that effect (if any) compares to the effect of the three additives referred to in paragraphs 121(i)-(iii) of the judgment of Arnold J dated 3 April 2009;
(iii) whether the outcome of issues (i) and (ii) above renders the Fence results not useful for the formulation of the Defendants' product
- Arnold J answered those questions as follows:
i) In general terms, the addition of LDPE to a polymer matrix otherwise consisting of pure HDPE would be expected to increase the migration rate of deltamethrin, with higher percentages of LDPE having a greater effect than lower percentages; but there is no evidence that the addition of LDPE in the quantities used by the Defendants (i.e. [REDACTED]% where present) has a significant effect on migration rate.
ii) [ADDITIVE A] acts, and was known to Dr Skovmand to act, as a migration enhancer. [ADDITIVE C] acts, and was known to Dr Skovmand to act, as a migration inhibitor. The effect of [ADDITIVE A] can be seen even in a polymer matrix containing [REDACTED]% LDPE. Apart from that, the relative effect of LDPE on the one hand and [ADDITIVE A]/[ADDITIVE B]/[ADDITIVE C] on the other hand on deltamethrin migration is unknown.
- If that is right, then it follows that the remitted issues have no effect on the conclusions reached in the Main Judgment, which, as I have said, I would uphold.
- Mr Howe QC therefore had the formidable task of showing that the Judge was wrong on the facts – that his conclusions were such that there was no material to support them. I turn to consider that.
- The Judge cites the relevant parts of the patent application at [72- 88]. For brevity I do not repeat it here. The Judge's summary will suffice:
 In summary, the invention disclosed and claimed in the PCT Application is that the migration of deltamethrin in insecticidal polyethylene fibres and fabrics can be optimised by using a mixture of HDPE and LDPE. A ratio of 9:1 (i.e. 10% LDPE) is particularly preferred, but no experimental data is disclosed to support the choice of 10% LDPE. The specification points out that migration is also affected by other factors, including (i) the presence of PBO (and the ratio PBO to deltamethrin), (ii) the presence of "migration promotors and inhibitors" and (iii) the thickness of the fibre.
- The Judge also sets out the relevant passages of all the documents disclosed by VF. He deals with them. I go to just two; those which Mr Howe contended were the best from the defendants' point of view.
- One is a PowerPoint presentation of May 2007:
LDPE percentage is considered as key driving factor in controlling migration in PE bednet.
The other is a report of some trials done in May 2007. It contains the following statement:
A,B,C: confirm LDPE drives migration significantly and dominantly.
- Mr Howe contended this showed that having changed the LDPE/HDPE ratio for NetProtect as compared with Fence, the additive figures for Fence would have been no guide as to what to use for NetProtect. Moreover, he submitted, the document should be read perfectly generally – any ambiguity should be read against VF who had elected not to call Mrs Phan, the author of the document.
- Moreover the defendants had been deprived at the main trial of challenging Mrs Phan's evidence where she had said in her witness statement:
To some extent, the level of LDPE in the yarn would also be important, as LDPE can be used as a migration rate regulator.
Mr Howe submitted that with the "key driving factor" and "dominantly" documents in his hand, counsel cross-examining her at the time would have been able to show she had grossly understated the effect, merely saying "to some extent" when in truth the ratio was dominant.
- The Judge accepted evidence to the effect that generally speaking the ratio mattered when speaking of varying the ratio running from on the one hand to 100% on the other. But the comments relied upon by the defendants were not made in the context of comparing the effects of the additives as compared with the effects of changing the ratio. Thus the Judge did not accept that "dominantly" meant in context a comparison with the effects of the additives – it was a straight comparison of the effect of different ratios.
- That is clearly right because the effects of the additives are not discussed at all. I do not think the various passages cast doubt on Mrs Phan's evidence at the main trial. Although the ratios of high and low density differ somewhat, there is no evidence that they "swamp" the effects of the additives.
- Indeed, as Mr Platts-Mills QC submitted, there is no actual evidence that the higher proportion of LDPE in the NetProtect recipe as compared with that in the key Fence recipes makes any difference. Or that during the development of NetProtect, Dr Skovmand thought that it did and worked on that basis.
- So I would dismiss the appeal in regard to the remitted questions.
The Liability of Mrs Sig
- I turn to the position of Mrs Sig. The terms of her contract with VF were pleaded and admitted as follows:
(ii) Clause 8 of Mrs Sig's contract of employment provided as follows; "[Ms Sig] shall keep absolutely confidential all information relating to the employment and any knowledge gained in the course of her employment and which inherently should not be disclosed to any third party. The absolute duty of confidentiality also applies after [Ms Sig] has terminated the employment with [the First Claimant]".
(iii) The following terms were express, alternatively implied, terms of Mrs Sig's and Mr Larsen's contracts of employment with the First Claimant under Danish Law.
(a) That each owed a duty of good faith and fidelity to the First Claimant;
(b) That each owed a duty so long as the contract of employment subsisted not to use any information confidential to the Claimants or to disclose such information to any third party; and
(c) That each owed a duty following the termination of the contract of employment, not to disclose any trade secrets or other highly confidential information of the Claimants, including the Confidential Information, or to use such information for their own purposes or the purposes of third parties.
- It was agreed that although the contract was governed by Danish law, it could and should be treated as governed by English law. That includes the law as to implication of terms.
- The Judge held that Mrs Sig was in breach of her contract, even though it was not suggested or shown that she had access to the Fence Database or knew that it had been used to develop NetProtect. His reasoning was as follows:
[23 Remedies Judgment] Mrs Sig. Mrs Sig was subject to an express obligation of confidentiality contained in clause 8 of her contract of employment. This obligation explicitly continued after termination of her employment. After termination, however, the obligation is only enforceable in so far as it prevents Mrs Sig from misusing VF's trade secrets. In the absence of an express term, Mrs Sig would be subject to an implied term to that effect. Although Mrs Sig was not personally involved in devising the initial NetProtect recipes or carrying out the trials, she was closely involved in setting up both Intection and Bestnet and in the commercial side of the development of NetProtect. In my judgment, this is sufficient to render her liable for breach of her own obligation of confidence.
 Counsel for the Defendants submitted that Mrs Sig could not be liable for breach of confidence absent a finding that she knew that the initial NetProtect recipes were derived from the Fence database. I do not agree. A person can be liable for breach of confidence even if he is not conscious of the fact that what he is doing amounts to misuse of confidential information: see Seager v Copydex Ltd  1 WLR 923. I would agree that a person who is not otherwise subject to an obligation of confidence (e.g. by contract) will not come under an equitable obligation of confidence purely as a result of the receipt of confidential information unless and until he or she has notice (objectively assessed by reference to a reasonable person standing in the shoes of the recipient) that the information is confidential; but that is a different point.
- Mr Howe submitted that this was wrong. As the argument developed he put forward two attacks. The first was that Mrs Sig cannot be said to have misused the confidential information herself because she did not know it and did not know that it was being used. The second was that the express term of the contract itself does not forbid unknowing use of the information and no term forbidding such use should be implied. The later submission runs counter to the admission, but, it is said, the question of implication of a term is a matter of law only (at least in this case) and so the point can properly be taken.
- Mr Platts-Mills submitted that once the law imposes an obligation of confidence, whether in equity or as a matter of contract, the obligation is broken where the obligee uses the information, even if unknowingly. Once the obligation is there, the liability is strict and absolute. The only difference between contract and equity lies in whether ornot the obligation is imposed. Equity only imposes it as a matter of conscience in all the circumstances. So the obligee must know, or at least ought to know, that he is in receipt of a secret. Contract can simply impose, and has here imposed, the obligation irrespective of knowledge. When it comes to misuse there is no difference between contract and equity. All you need is use, knowing or unknowing, direct or indirect. Here Mrs Sig was using the information when she was placing orders for NetProtect with suppliers.
- Mr Platts-Mills' argument is far reaching. An obligation of strict liability is itself very serious. When one considers that the court can grant (and in the case of Mrs Sig has) grant an injunction restraining the individual from using confidential information which the individual does not have and never had, the extent of the suggested obligation is exposed with even greater effect.
- Mr Platts-Mills relies on Seager v Copydex, as did the Judge, to establish his proposition. But there the defendants were actually using the information which had been imparted to them, albeit they were doing so unconsciously. That is not so in the case of Mrs Sig. I do not think Seager assists here.
- Nor do I consider that there can be an implied term imposing strict liability. There is no business reason to imply a term of that harsh extent. All the principles of implication of a term into a contract (which I do not set out here - they are too well known) militate against it.
- Accordingly I conclude that the Judge was wrong to hold that Mrs Sig was guilty of breach of confidence. She behaved reprehensibly in a number of ways. But breach of confidence was not one of them.
- The Judge granted an injunction in respect of the initial NetProtect product. But he refused an injunction in respect of the later variants, known as WHOPES I and II. He considered WHOPES II in his remedies judgment:
 I accept VF's case [i.e. for an injunction] to the extent that I consider that the manufacture and sale of the NetProtect product launched by the Defendants in October 2005 did amount to misuse of VF's trade secrets. This is because it was made in accordance with the [redacted] formulation (that is to say, a formulation which was close to some of the VF recipes in the Fence database and which the information in the database indicated would be well worth trying, which formed part of the October 2004 trials and which was the Defendants' reference formulation for their development work) and differed little from VF's recipes in terms of polymer composition and other additives.
 By contrast, I consider that the manufacture and sale of mosquito nets made in accordance with the formulation submitted by Bestnet for WHOPES II evaluation does not amount to misuse of VF's trade secrets, although that formulation derived from such misuse. This is partly because it was a [redacted] formulation, which is further away from VF's recipes. More importantly, as counsel for the Defendants submitted, I have already found that this formulation differed from any of VF's recipes, in particular in terms of its polymer composition, inclusion of [redacted] and inclusion of [redacted]. Counsel for VF relied upon Dr Skovmand's evidence that it was "not very different"; but in my judgment it was different enough.
 I also consider that, contrary to the submission of counsel for VF, the passage of time since October 2004 is of relevance. Although this is not a case in which the confidential information could be readily ascertained by reverse engineering (some information can undoubtedly be obtained by chemical analysis, but the Defendants have not suggested that the precise recipe could be ascertained), the identities of the three principal additives can be obtained from public domain sources and suitable proportions of them can be worked out by trial and error, which after all is what Dr Skovmand did. Thus I am confident that an independent consultant could have come up with similar recipes after the expenditure of a certain amount of time and effort. By misusing VF's trade secrets, Dr Skovmand saved the Defendants that time and effort. As indicated above, it seems to me that this is a relevant consideration even where the confidential information has neither been published nor is readily ascertainable from public domain sources.
 In short, the remedy should be proportionate to the wrong. Having regard to the matters outlined above, I consider that an injunction to restrain the manufacture and sale of the product submitted for WHOPES II evaluation would be disproportionate.
- Following his judgment in respect of WHOPES II, VF asked the Judge to consider an injunction in respect of the WHOPES I product. This he refused in the single paragraph WHOPES I judgment:
My decision with regard to the product submitted for WHOPES I approval in March 2006 is that I will not grant an injunction in respect of that. I can quite see that it is closer to the October 2005 product than the WHOPES II product, and therefore closer to the VF recipes. Nevertheless there are differences and, taking into account the passage of time for the reasons given in the remedies judgment I think it would be disproportionate to grant an injunction in respect of the WHOPES I product.
- If the Judge cannot be faulted about WHOPES I then, as Mr Platts-Mills accepted, his WHOPES II decision must stand. Mr Platts-Mills submitted that the Judge was indeed wrong about WHOPES I because that product was so close in recipe to that of the original NetProtect product as to embody substantially all the information taken from Fence – it was a "closely derived product." He said that this was shown by its submissions for approval without testing. He showed us the cross-examination of Dr Skovmand who said: "it was a courageous guess but not a very daring one."
- However the "guess" was not based simply on the Fence data. By the time Dr Skovmand arrived at the recipe for WHOPES I, in March 2006, some 18 months had passed since the original recipe, based using the Fence data, had been devised. By then Dr Skovmand had conducted further tests with other recipes and bioassays. The change was made after a lot of work had been done. The "not very daring guess" was thus made with much subsequently acquired knowledge.
- That being so, I cannot begin to see a fault with Judge's reasoning. An injunction is a discretionary remedy and it is not for this Court to interfere where a trial judge has carefully weighed all the relevant factors, as the Judge did here.
- I should add a word about the Judge's references to proportionality and the passage of time. Whether or not conventional English law principles as to the grant of an injunction embody that concept (I rather think they do, though the now fashionable word "proportionate" is not to be found in the older case law), in the case of enforcement of an intellectual property right, the requirement is explicit. The Enforcement Directive (2004/48/EC) by Art. 3(2) inter alia requires that measures to enforce intellectual property rights shall be proportionate. It is accepted that a claim for misuse of technical trade secrets such as the present is a claim to enforce an intellectual property right. So the Judge was right to consider proportionality.
- The passage of time is likewise relevant. After all what the defendants did was to cut a corner, getting on the market earlier than if they had not misused confidential information. Mr Gary Howe, in cross-examination, had accepted that scientifically the defendants could have developed their product independently – time was saved and perhaps not a very great deal of it. By the time of the WHOPES I product the head start had much less significance. That was a matter which the Judge was properly entitled to take into account.
- Accordingly I would allow the appeal of Mrs Sig and I would dismiss all the other appeals and the cross-appeal. There is a separate appeal in respect of costs which we have not yet heard. I provisionally propose that the Court deals with this on the basis of the written skeleton arguments, only calling for a hearing if we think it necessary. I would hope that would not be so. The parties are to make their proposals as to that and all the other matters concerning the final order initially in writing.
Sir John Chadwick:
- I agree.
Lord Justice Jackson:
- I also agree.
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